A $1.6-BILLION bond deal that a unit of UK insurer Prudential Plc would use to help complete a spinoff has suddenly been thrown into limbo after the company said that two former executives have emerged with potential claims.

The unit, Jackson Financial Inc., isn’t disclosing the nature of the claims, leaving investors puzzled as to why it pulled the plug on the deal just as it was set to price late Thursday. Bond investors were poised to gobble up the debt, with order books six times oversubscribed at the peak of demand, according to a person with knowledge of the transaction, who wasn’t authorized to speak publicly and asked not to be identified.

Jackson “received late notification concerning potential claims by two recently departed executives of the business, which means that a proposed debt transaction will be delayed,” the company said in an statement late Thursday. It said it still expects to complete the so-called demerger in the second quarter.

The company recently announced leadership changes ahead of its planned separation from Prudential. Jackson named Laura Prieskorn as chief executive officer and Marcia Wadsten as chief financial officer, replacing Michael Falcon and Axel Andre who left the company as part of the overhaul, according to a news release. Dev Ganguly was named chief operating officer, while Julia Goatley rejoined Jackson as general counsel, an interim role to replace Andrew Bowden, who left.

A representative for the company declined to comment beyond the statement, and representatives for the banks running the bond deal — Morgan Stanley, Citigroup Inc., and JPMorgan Chase & Co. — declined to comment.

Such delays are rare in the investment-grade debt market, where offerings are typically wrapped up within the same day they’re launched. The setback may impact Jackson’s borrowing costs when it does price the debt, depending on how long it takes to resolve the matter, according to CreditSights. That was the case with ING Groep NV last year, which had to pay up after reviving a bond sale that fell apart amid the resignation of its chief executive officer. The Dutch lender set a higher coupon and pared the deal size after losing billions of dollars in orders, as the resurrected deal also came in late February amid the onset of the coronavirus in the US.

Before Jackson’s bond sale was derailed, the large number of orders on the deal had allowed it to slash the borrowing costs being proposed. The extra yield over Treasuries on a 10-year portion was cut by 35 basis points to 165 basis points, according to a person with knowledge of the deal.

Prudential, which focuses mainly on life and health insurance, is splitting off the US business as it seeks to expand in high-growth markets in Asia and Africa. The firm last year said it planned to separate Jackson via an initial public offering in 2021. The insurer abandoned that idea in January, announcing the demerger instead. — Bloomberg